Claim Management And Analysis: A Case Study Of High Rise Building Project

Normally, the success of construction claim management is the satisfaction of all parties involved in the project. This success must be started from the preparation of each claim such as entitlement, cost and documentation.

Normally, there are two parts of each entitlement for each claim. The first one must set up the legal / law as well as other data base on which normally extracted from the construction contract document. In case there are conflicts, the entitlement must be separated into many branches so that they can be understood easily in a logical express. The second one must describe the variation of the work and express the action of the contractor to each change, especially in quantity and quality.

The cost section is normally based on the available cost in the signed contract. The costs of each work must be considered carefully because they can affect the relationship between each party. In the contract, cost is always limited such as “can not be changed in case the total variation is smaller than 0.2% of contract amount for example”, etc. It is necessary to breakdown and explain the party how the cost is developed in this section.

Documentation seems to be the most important for the success of a construction claim. Generally, all the documents which involve to the claim such as variation order, drawings, contract, specification, etc must be included in this section. Project manager, site manager, engineers, consultant, lawyers and others are always involve supporting for the full success of this documentation.

Base on the above analysis, expert can pick out the weak points and strong points of each company for claim management and they can improve them. The guidelines below would be helpful to companies to improve their claim management :
• The project design and handling must be integrated in claim management
• Make the tight communication inside your company about the claim situations
• Prepare and check carefully the documentation which will support for the claim
• Reviewing all signed contract to check if they are feasible contracts or not
• Have an expert in making decision for the strategic claim

The following normally are the most related potential problems which affect the project entitlement, cost and document in construction claim:
• Scope definition is incomplete and inadequate
• Lack of integrating and understanding of each scope of work
• Not tight contract document
• Not enough condition from the client to support the contractor to execute the work
• Catch up the schedule by accelerating
• Acceleration of contractor without submitting claim to the client
• Delays
• Changes in work because of imperfect contract drawings lead to the disruption

According to Keith Pickavance (2008), “Poor quality of project documentation leads to poor factual evidence and present serious difficulties in identifying the rights of the parties.”

Lack of communication normally leads to the delay of the project and also shows that the project management is bad.

Mr. Giang Thien Duy Nguyen made a case study which objectives were to: (1) study claims in high rise building construction progress; (2) study what analysis method is used for claim; and (3) study the prepare effective claim analysis frame work.

Conclusions

In this study, the framework on claim analysis is designed. This study helped the claimant understand clearly about the claim documentation, the way to prepare a claim, the method to calculate the quantity – cost - profit – overhead, etc. The design documents are the most important thing during construction progress. The fewer the errors, the fewer the missing information, therefore fewer claims. So, the Client just should sign consultant contract with a very experienced Project Management company.

Furthermore, the Contractor’s ability is also very important. Their experience will help the Project Management foresee what would be the errors, and what information should be adjusted instantly. Their experience will both PM and Client to reduce the cost of the project by properly proposing method statement as well as cheaper but good quality material.

Recommendations

• In general, a tight contract such as the signed contract of the above project seems to be unfair with the contractor because of the clause “Contractors have to arrange and execute themselves to complete the project, no claim of weather condition be admitted by the PM, by the Client”, because in fact, contractor can not complete their mission if the weather condition is of disadvantage.

• Claim framework as well as procedure of claim approval should be applied but not in all cases. It’s up to each project character, it’s up to the relationship between the Client, the PM and the Contractor. Personally, the applied solution of the above project (using “technical meeting book”) is highly appreciated. This solution helps all parties speed up the schedule and everything can be solved quickly and fairly.

• Any how, the documentation, the factual support for the claim, etc should be prepared carefully so that every parties can review those easily and also for easy contract liquidation later.

• Careful preparation of all related document will help parties to avoid disputes.

• The level of project manager of the Client, and of the Project management is also very important. Their experience will help all the claims if any, be solved and be approved without disputes.

• Once again, a successful project is a project which brings benefit to all parties involve in the project. Therefore, before the problem starts, all parties must try their best to solve them first.

His thesis abstract is copied and posted.

Abstract

High rise project budget increased, project delayed in construction can be caused by a number of changes in a project such as scope change, extra work, lost productivity, acceleration, contract termination, etc. Many factors by many parties cause those matters. However, in general, cost & schedule control are really complicate. Non-critical activity does not make the affect to the project schedule, does not make the delay, and does not impact to the project amount. On contrary, the delay of a critical activity will make the project delay and impact the project amount also. The delay caused by critical activity will cause the damage to other parties. The reason of delay does not origin from any party but origin from no party (e.g. bad weather conditions). Base on those factors, each party can claim each other to protect the right of them. So, for a high rise building project, what should we do with a claim, when will we claim, how claim can be calculated, etc, that is main content of this case study.